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Elbit Systems — Earnings Release 2009
Nov 18, 2009
6762_rns_2009-11-18_456cdbed-1414-4a08-bf4a-ffd472bba7b3.pdf
Earnings Release
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Earning Release
ELBIT SYSTEMS REPORTS THIRD QUARTER 2009 RESULTS
Revenues increased by 9.1% YoY to $732.5 million; Net income increased by 63.7% YoY to $58.3 million; Diluted net earnings per share increased by 62.7% to $1.35
Haifa, Israel, November 18, 2009 – Elbit Systems Ltd. (the “Company”) (NASDAQ: ESLT, TASE: ESLT) , the international defense electronics company, today reported its consolidated financial results for the third quarter ended September 30, 2009.
Revenues increased by 9.1% to $732.5 million in the third quarter of 2009, as compared to $671.2 million in the third quarter of 2008. The Company's revenues in the Electro-optics area of operations increased in the third quarter of 2009 compared with that of the third quarter of 2008, mainly as a result of increased sales of night vision equipment.
Gross profit increased by 8.9% to $217.3 million (29.7% of revenues) in the third quarter of 2009, as compared with gross profit of $199.5 million (29.7% of revenues) in the third quarter of 2008.
Net research and development ("R&D") expenses were $56 million (7.6% of revenues) in the third quarter of 2009, as compared to $45 million (6.7% of revenues) in the third quarter of 2008. The higher level of R&D expenses in the third quarter of 2009 reflected increased efforts on development and adaptations of products and systems to market requirements.
Marketing and selling expenses were $67.1 million (9.2% of revenues) in the third quarter of 2009, as compared to $50.3 million (7.5% of revenues) in the third quarter of 2008. The increased level of marketing and selling expenses in the quarter reflected enhanced efforts by the Company in pursuit of a wide range of business opportunities in various markets.
General and administrative (“G&A”) expenses were $28.5 million (3.9% of revenues) in the third quarter of 2009, as compared to $25.8 million (3.9% of revenues) in the third quarter of 2008.
Net financial expenses were $0.6 million in the third quarter of 2009, as compared to $16.1 million in the third quarter of 2008. The decrease in 2009 was affected by the Company’s hedging activity, which reduced the Company's exposure to changes in the value of U.S. Dollar versus the Israeli Shekel, as well as by decreased interest rates in the market. Since our reporting currency is the U.S. Dollar, the weakening of the U.S, Dollar against the Israeli Shekel negatively impacted the Company’s gross and operating income; however, it also increased the value of the Company's currency hedge derivatives in Israeli Shekels. Net financial expenses in the third quarter of 2008 included the impact of a write-off related to Auction Rate Securities ("ARS") in the amount of approximately $6 million.
Taxes on income were $11.4 million (effective tax rate of 17.6%) in the third quarter of 2009, as compared to taxes on income of $16.4 million (effective tax rate of 26.3%) in the third quarter of 2008. The change in the effective tax rate was attributable mainly to the mix of the tax rates in the various tax jurisdictions in which the Company's entities generate taxable income.
Earning Release
Equity in net earnings of affiliated companies and partnership increased in the third quarter of 2009 to $6.2 million (0.8% of revenues), as compared to $2.1 million (0.3% of revenues) in the third quarter of 2008. This was a result of both growth in revenues and operational improvements in those entities.
Net income attributable to non-controlling interests was $1.4 million in the third quarter of 2009, as compared to $12.4 million in the third quarter of 2008. The decrease in net income attributable to noncontrolling interests was mainly a result of the Company's purchase during the second quarter of 2009 of the remaining 49% of Kinetics Ltd.'s shares, making Kinetics a wholly-owned subsidiary.
Net income attributable to the Company's ordinary shareholders increased in the third quarter of 2009 by 63.7% to $58.3 million (8.0% of revenues), as compared with $35.6 million (5.3% of revenues) in the third quarter of 2008.
It should also be noted that according to ASC 810-10 "Consolidation", which is applicable to the Company's results starting from January 1, 2009, consolidated net income attributable to the Company's ordinary shareholders is calculated after eliminating net income or loss attributable to non-controlling interests.
Diluted net earnings per share attributable to the Company's ordinary shareholders were $1.35 for the third quarter of 2009, as compared with $0.83 for the third quarter of 2008, an increase of 62.7%.
The Company’s backlog of orders totaled $5,008 million as of September 30, 2009, as compared with $5,030 million as of December 31, 2008. Approximately 66% of the current backlog is due to orders from outside Israel. Approximately 57% of the current backlog is scheduled to be performed during the remainder of 2009 and during 2010.
Operating cash flow was $127 million in the nine months ended September 30, 2009, as compared to $112.9 million in the nine months ended September 30, 2008.
Management Comment:
“Our quarterly results reflect continued growth in sales and revenues,” commented Joseph Ackerman, President and CEO of Elbit Systems. “We continued our strategic process of enhancing our R&D activities, in order to bring to market a broad range of mature and operationally ready products and systems. This was in response to market demand for mature products and systems allowing for rapid deployment. We are seeing the fruits of our previous investments, which are strengthening our competitive position in our areas of activities.”
Mr. Ackerman continued, “We see emerging opportunities in existing and new markets. We have increased our sales and marketing efforts to capitalize on these opportunities through the realization of business and operational synergies among the companies we have acquired in recent years both in Israel and internationally. We believe these efforts will help us maintain our continued growth and technological leadership while achieving improved profitability in the years ahead.”
Dividend:
The Board of Directors declared a dividend of $0.36 per share for the third quarter of 2009. The dividend’s record date is December 1, 2009, and the dividend will be paid on December 14, 2009, net of taxes and levies, at the rate of 16.03%.
Earning Release
Conference Call
The Company will host a conference call today, Wednesday, November 18, 2009, at 9:00am EST. On the call, management will review and discuss the Company's third quarter 2009 results and will be available to answer questions.
To participate, please call one of the teleconferencing numbers that follow. Please begin placing your call at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.
US Dial-in Numbers: 1 888 407 2553 UK Dial-in Number: 0 800 917 9141 ISRAEL Dial-in Number: 03 918 0609 INTERNATIONAL Dial-in Number: +972 3 918 0609
at: 9:00am Eastern Time; 6:00am Pacific Time; 2:00pm UK Time; 4:00pm Israel Time
This call will also be broadcast live on the Company's web-site at http://www.elbitsystems.com . An online replay will be available from 24 hours after the call ends.
Alternatively, for two days following the call, investors will be able to dial a replay number to listen to the call. The dial-in numbers are:
1 888 326 9310 (US) or +972 3 925 5900 (Israel and International) .
About Elbit Systems
Elbit Systems Ltd. is an international defense electronics company engaged in a wide range of defenserelated programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance ("C4ISR"), unmanned air vehicle (UAV) systems, advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. The Company also focuses on the upgrading of existing military platforms and the development of new technologies for defense, homeland security and commercial aviation applications.
Earning Release
Attachments:
Consolidated balance sheet Consolidated statements of income Condense consolidated statements of cash flow Consolidated revenue distribution by areas of operation and by geographical regions
Company Contact:
IR Contact:
Joseph Gaspar, Executive VP & CFO Ehud Helft / Kenny Green Dalia Rosen, Head of Corporate Communications Elbit Systems Ltd. GK Investor Relations Tel: +972-4 831-6663 Tel: 1 646 201 9246 Fax: +972-4-831-6944 E-mail: [email protected] E-mail: [email protected] [email protected]
This press release contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended) regarding Elbit Systems Ltd., and/or its subsidiaries (collectively the "Company"), to the extent such statements do not relate to historical or current fact. Forward looking statements are based on management’s expectations, estimates, projections and assumptions. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks and uncertainties, the outcome of which is difficult to predict. Therefore, actual future results, performance and trends may differ materially from these forward-looking statements due to a variety of factors, including, without limitation: scope and length of customer contracts; governmental regulations and approvals; changes in governmental budgeting priorities; general market, political and economic conditions in the countries in which the Company operates or sells, including Israel and the United States among others; differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts; and the outcome of legal and/or regulatory proceedings. The factors listed above are not all-inclusive, and further information is contained in Elbit Systems Ltd.’s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission. All forward-looking statements speak only as of the date of this release. The Company does not undertake to update its forward-looking statements.
(FINANCIAL TABLES TO FOLLOW)
Earning Release
ELBIT SYSTEMS LTD. CONSOLIDATED BALANCE SHEETS
(In thousands of US Dollars)
| AssetsCurrent assets:Cash and cash equivalentsShort term bank depositsAvailable for sale marketable securitiesTrade receivables, netOther receivables and pre-paid expensesInventories, net of advancesTotal current assetsInvestment in affiliated companies and a partnershipLong-term deposits and marketable securitiesLong-term receivablesDeferred income taxesSeverance pay fundProperty and equipment, netGoodwill and other intangible assets, netTotal assetsLiabilities and Shareholders' EquityShort-term bank credit and loansTrade payablesOther payables and accrued expensesAdvances from customers, netLong-term loansAccrued termination liabilityDeferred income taxesAdvances from customersOther long-term liabilitiesElbit Systems Ltd.'s shareholders' equityNon-controlling interests(*)Total shareholders' equityTotal liabilities and shareholders' equity | September 302009Unaudited154,529101,09926,464559,373170,900600,5091,612,87484,48638,6285,6998,558268,232405,603398,018580,7002,997,195833286,287528,272381,4441,196,836429,203351,48767,593108,29635,058991,637787,55921,163808,7222,997,195 | December 312008 |
|---|---|---|
| Audited | ||
| 204,67069,6423,731477,010203,990644,107 | ||
| 1,603,150 | ||
| 62,30034,3556,3909,201236,928 | ||
| 349,174 | ||
| 384,086 | ||
| 594,283 | ||
| 2,930,693 | ||
| 15,413340,315468,224489,192 | ||
| 1,313,144 | ||
| 269,760332,23670,068115,47029,707 | ||
| 817,241 | ||
| 723,83376,475 | ||
| 800,308 | ||
| 2,930,693 |
(*) The Company has adopted ASC 810-10 "Consolidation," as of January 1, 2009. Pursuant to ASC 810-10, net income attributable to non-controlling interests is presented in the statement of income as part of consolidated net income and then shown on a separate line item as a reduction to arrive at net income attributable to Elbit Systems Ltd., which is the equivalent of "net income" presented in previous statements of income. Cumulative net income attributable to non-controlling interests is presented on the balance sheets as part of total shareholders' equity and is shown on a separate line item. Total shareholders equity, net of the cumulative net income attributable to non-controling interests, represents the shareholders' equity attributable to the company's ordinary shareholders equity, which is the equivalent of "shareholders equity" presented in previous balance sheets.
Earning Release
ELBIT SYSTEMS LTD. CONSOLIDATED STATEMENTS OF INCOME
(In thousands of US Dollars, except for share and per share amounts)
| RevenuesCost of revenuesGross profitOperating expenses:Research and development, netMarketing and sellingGeneral and administrativeAcquired IPR&DTotal operating expensesOperating incomeFinancial expenses, netOther income (expenses), netIncome before taxes on incomeTaxes on incomeEquity in net earnings of affiliatedcompanies and partnershipConsolidated net incomeLess: net income attributable tonon-controlling interests(*)Net income attributable to Elbit Systems Ltd.Earnings per share attributable toElbit Systems Ltd.'s ordinary shareholders:Basic net earnings per shareDiluted net earnings per shareWeighted average number of shares used incomputation of basic earnings per shareWeighted average number of shares used incomputation of diluted earnings per share | Nine Months EndedSeptember 30Three Months EndedSeptember 302009200820092008Unaudited2,117,7411,940,417732,520671,1871,480,3021,374,326515,219471,691637,439566,091217,301199,496154,910121,10956,02244,985191,561156,39567,09650,33686,805101,76628,51925,842----433,276379,270151,637121,163204,163186,82165,66478,333(8,165)(33,056)(564)(16,083)(868)4,230(222)17195,130157,99564,87862,26737,69628,08911,44816,405157,434129,90653,43045,86214,3958,0716,2022,125171,829137,97759,63247,987(10,598)(39,073)(1,377)(12,391)161,23198,90458,25535,5963.822.351.370.853.762.311.350.8342,24142,07342,42642,07842,89742,85243,23342,813 | Nine Months EndedSeptember 30Three Months EndedSeptember 302009200820092008Unaudited2,117,7411,940,417732,520671,1871,480,3021,374,326515,219471,691637,439566,091217,301199,496154,910121,10956,02244,985191,561156,39567,09650,33686,805101,76628,51925,842----433,276379,270151,637121,163204,163186,82165,66478,333(8,165)(33,056)(564)(16,083)(868)4,230(222)17195,130157,99564,87862,26737,69628,08911,44816,405157,434129,90653,43045,86214,3958,0716,2022,125171,829137,97759,63247,987(10,598)(39,073)(1,377)(12,391)161,23198,90458,25535,5963.822.351.370.853.762.311.350.8342,24142,07342,42642,07842,89742,85243,23342,813 | Nine Months EndedSeptember 30Three Months EndedSeptember 302009200820092008Unaudited2,117,7411,940,417732,520671,1871,480,3021,374,326515,219471,691637,439566,091217,301199,496154,910121,10956,02244,985191,561156,39567,09650,33686,805101,76628,51925,842----433,276379,270151,637121,163204,163186,82165,66478,333(8,165)(33,056)(564)(16,083)(868)4,230(222)17195,130157,99564,87862,26737,69628,08911,44816,405157,434129,90653,43045,86214,3958,0716,2022,125171,829137,97759,63247,987(10,598)(39,073)(1,377)(12,391)161,23198,90458,25535,5963.822.351.370.853.762.311.350.8342,24142,07342,42642,07842,89742,85243,23342,813 | Year EndedDecember 312008 |
|---|---|---|---|---|
| Audited | ||||
| 2,117,7411,480,302637,439154,910191,56186,805-433,276204,163(8,165)(868)195,13037,696157,43414,395171,829(10,598)161,2313.823.7642,24142,897 | 1,940,4171,374,326566,091121,109156,395101,766-379,270186,821(33,056)4,230157,99528,089129,9068,071137,977(39,073)98,9042.352.3142,07342,852 | 732,520515,219217,30156,02267,09628,519-151,63765,664(564)(222)64,87811,44853,4306,20259,632(1,377)58,2551.371.3542,42643,233 | 2,638,2711,870,830 | |
| 767,441 | ||||
| 184,984198,274134,1821,000 | ||||
| 518,440 | ||||
| 249,001(36,815)94,294 | ||||
| 306,48054,367 | ||||
| 252,11314,435 | ||||
| 266,548 | ||||
| (62,372) | ||||
| 204,176 | ||||
| 4.85 | ||||
| 4.78 | ||||
| 42,075 | ||||
| 42,758 |
(*) The Company has adopted ASC 810-10 "Consolidation," as of January 1, 2009. Pursuant to ASC 810-10, net income attributable to noncontrolling interests is presented in the statement of income as part of consolidated net income and then shown on a separate line item as a reduction to arrive at net income attributable to Elbit Systems Ltd., which is the equivalent of "net income" presented in previous statements of income. Cumulative net income attributable to non-controlling interests is presented on the balance sheets as part of total shareholders' equity and is shown on a separate line item. Total shareholders equity, net of the cumulative net income attributable to non-controling interests, represents the shareholders' equity attributable to the company's ordinary shareholders equity, which is the equivalent of "shareholders equity" presented in previous balance sheets.
Earning Release
ELBIT SYSTEMS LTD. CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands of US Dollars)
| CASH FLOWS FROM OPERATING ACTIVITIESNet incomeAdjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortizationWrite-off impairmentAcquired IPR&DOther-than-temporary impairment of available for sale marketable securitiesStock based compensationDeferred income taxes and reserveSeverance, pension and termination indemnities, netGain on sale of property, plant and equipmentMinority interests in earnings (loss) of subsidiariesGain on sale of investmentsEquity in net losses (earnings) of affiliated companies and partnership,net of dividend received ()Changes in operating assets and liabilities:Decrease (increase) in short and long-term receivables and prepaid expensesDecrease (increase) in inventories, netIncrease in trade payables, other payables and accrued expensesDecrease in advances received from customersNet cash provided by operating activitiesCASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipmentAcquisition of subsidiariesInvestments in affiliated companiesProceeds from sale of property, plant and equipmentProceeds from sale of investmentInvestment in short-term bank deposits, netInvestment in long-term bank deposits, netNet cash used in investing activitiesCASH FLOWS FROM FINANCING ACTIVITIESProceeds from exercise of optionsRepayment of long-term bank loansReceipt of long-term bank loansDividends paidTax benefit in respect of options exercisedChange in short-term bank credit and loans, netNet cash provided by (used in) financing activitiesNET DECREASE IN CASH AND CASH EQUIVALENTSCASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIODCASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD Dividend received | Nine Months EndedSeptember 30,20092008Unaudited161,23198,90493,18995,256-----8,2363,8393,766(4,824)(5,715)(13,203)14,692(468)(152)10,59839,073(120)-(2,668)1,718(41,871)32,32044,913(177,424)(8,233)103,589 (115,360)(101,356)127,023112,907(78,054)(103,391)(124,033)(4,785)(21,794)(811)6,9726,132--(40,946)(6,659) (11,272) (7,054)(269,127) (116,568)11,340238(68,159)(223,255)217,115168,211(60,897)(23,765)-- (7,436)-91,963 (78,571)(50,141)(82,232)204,670362,802154,529280,57011,7279,789 | Year EndedDecember 31,2008 |
|---|---|---|
| Audited | ||
| 161,23193,189---3,839(4,824) (13,203)(468)10,598(120)(2,668)(41,871)44,913(8,233) (115,360)127,023(78,054)(124,033)(21,794) 6,972-(40,946) (11,272)(269,127)11,340(68,159) 217,115(60,897)- (7,436)91,963(50,141)204,670154,52911,727 | 204,176129,43710,5141,00017,8855,067(8,488)15,211(1)62,372(100,031)(1,866)(39,698)(169,482)120,734 (37,402) | |
| 209,428 | ||
| (129,241)(20,637)(4,001)8,77950,254(58,634) (18,227) | ||
| (171,707) | ||
| 188(333,590)183,211(32,770)116 (13,008) | ||
| (195,853) | ||
| (158,132)362,802 | ||
| 204,670 | ||
| 12,569 |
Earning Release
ELBIT SYSTEMS LTD. DISTRIBUTION OF REVENUES
Consolidated revenues by areas of operation:
| Airborne systemsLand systemsC4ISR systemsElectro-opticsOther (mainly non-defense engineeringand production services)Total | Airborne systemsLand systemsC4ISR systemsElectro-opticsOther (mainly non-defense engineeringand production services)Total | Nine Months EndedSeptember 3020092008 | Nine Months EndedSeptember 3020092008 | Nine Months EndedSeptember 3020092008 | Nine Months EndedSeptember 3020092008 | Nine Months EndedSeptember 3020092008 | Nine Months EndedSeptember 3020092008 | Three Months EndedSeptember 3020092008 | Three Months EndedSeptember 3020092008 | Three Months EndedSeptember 3020092008 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $ | illions | % | $ millions | % | $ millions | % | $ millions | % | ||||
| systems | 513.3 | 2 | 4.2 | 474.5 | 24.5 | 166.7 | 22.8 | 161.7 | 2 | |||
| tems | 384.4 | 1 | 8.2 | 432.0 | 22.2 | 132.2 | 18.1 | 122.7 | 1 | |||
| t | 8197 | 3 | 87 | 7143 | 368 | 2896 | 395 | 2978 | 4 | |||
| ysems | . | . | . | . | . | . | . | |||||
| optics | 307.9 | 1 | 4.5 | 225.3 | 11.6 | 117.5 | 16.0 | 63.7 | ||||
| ainly non-defense engineering | ||||||||||||
| 92.42,117.7 | 4.4100.0 | 94.31,940.4 | 4.9100.0 | 26.5732.5 | 3.6100.0 | 25.3671.2 | ||||||
| 100.0 |
Consolidated revenues by geographical regions:
| IsraelUnited StatesEuropeOther countriesTotal | Nine Months EndedSeptember 3020092008$ millions%$ millions%468.322.1358.618.5603.128.5654.233.7550.826.0494.325.5495.523.4433.322.32,117.7100.01,940.4100.0 | Three Months EndedSeptember 3020092008$ millions%$ millions167.522.9131.8209.728.6221.4201.227.5157.8154.121.0160.2732.5100.0671.2 | Three Months EndedSeptember 3020092008$ millions%$ millions167.522.9131.8209.728.6221.4201.227.5157.8154.121.0160.2732.5100.0671.2 | |
|---|---|---|---|---|
| $ millions468.3603.1550.8495.52,117.7 | $ millions167.5209.7201.2154.1732.5 | $ millions131.8221.4157.8160.2671.2 | % | |
| 19.633.023.523.9 | ||||
| 100.0 |